Apple Corporation uses a global platform to produce the iPhone. Now that you understand the concept of comparative advantage, you can see why the engineering and design of the iPhone is carried out in the United States. Over the years, the United States has developed a comparative advantage in product development and marketing, sacrificing fewer resources to design high-tech equipment compared to other countries. China has a comparative advantage in assembling the phone because of its large skilled workforce. Korea has a comparative advantage in the manufacture of components. Korea concentrates its production by increasing its volume, learning better opportunities to manufacture screens and computer chips and using innovation to reduce average production costs. Apple, on the other hand, benefits because it can buy these quality products at lower prices. Assemble the global assembly line and you have the device we all know. While free trade is generally beneficial, removing a trade barrier to a given asset harms shareholders and workers in the domestic industry that produces that good.
Some groups that are aggrieved by foreign competition have sufficient political power to protect themselves from imports. As a result, despite their considerable economic costs, trade barriers continue to exist. For example, according to the U.S. International Trade Commission, the U.S. benefit from lifting trade restrictions on textiles and clothing would have been nearly $12 billion in 2002. This is a net economic benefit after deducting losses suffered by businesses and workers in the domestic industry. Nevertheless, local textile producers were able to convince Congress to maintain strict import restrictions. Agriculture has been essentially excluded from previous agreements, as it has been granted special status in the areas of import quotas and export subsidies, with slight reserves. However, at the time of the Uruguay Round, many countries considered the agricultural exception so egregious that they refused to sign a new no-move agreement for agricultural products.
These fourteen countries were known as the “Cairns Group” and consisted mainly of small and medium-sized agricultural exporters such as Australia, Brazil, Canada, Indonesia and New Zealand. World BankIntersisEd Finance Institute that provides economic assistance to poor and developing countries. is an important source of economic assistance to poor and developing countries. With the help of rich donor countries (such as the United States, Japan, Germany and the United Kingdom), the World Bank has provided nearly $73 billion in loans, grants and guarantees to some of the world`s poorest countries. The World Bank`s 2010 Annual Report, June 2010, web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/EXTANNREP/EXTANNREP2010/0,,contentMDK:22626599~menuPK:7115719~pagePK:64168445~piPK:64168309~the SitePK:7074179.html statements (published August 25, 2010).